That there is one of those thought experiment questions, rather than the kind that I can actually answer.

On the heels of another disappointing season, which saw attendance fall to its lowest level since 2003, it would be easy to wonder whether the $850+ million the Ricketts Family paid for the Cubs (and Wrigley Field, and 25% of CSN Chicago) in 2009 looks like an oopsie on the purchase price. But, on the other hand, with the Los Angeles Dodgers selling for more than $2 billion, the San Diego Padres selling for $800 million, and television contracts exploding, it starts to look like the Ricketts’ purchase price was a bargain.

So which is it? Are the Cubs now worth a great deal more than they were just a few years ago? Or has their value merely held steady?

Last week, sports law attorney Adam Klein was on Chicago Tribune Live discussing those very questions. His thoughts on the subject were interesting, and he was confident that the Cubs’ value is higher today than it was in 2009.

“[The Ricketts family] would get more today if [they] sold [the Cubs],” Klein said, per CSN Chicago. “Number one, don’t downplay the emotional part of it. There’s other people who would come along, they’d see what he paid, they’d want to get it – [the family is] not going to accept less than [they] paid for it – how much more [they’d pay], I don’t know.

“But take into account several things: number one, all boats benefit from a rising tide – the Dodger deal, the Padre deal, the Texas Rangers deal – all deals that were done since then, all at levels above what [Ricketts] paid or at levels relative to the size of the market would indicate what he’s got is worth more.

“Number two, you’re buying into the league. The league itself has done quite well and you’re buying into the growth strategy including its internet strategy and MLB TV, you get your fractional piece of that as being an owner. Martket size, big market teams, don’t come along very often. That’s part of the reason the Dodgers, even the Rangers, went for what they went for. And this is a big market, you can’t downplay that. And people will pay an amount that’s [on par] with the size of the market – more sponsors, more fans.”

Klein went on to discuss the local TV rights, which will be coming up in 2014 on WGN, but not until 2019 on CSN Chicago. There will be huge money there at some point.

The valuation question, to me, is interesting not only in a ‘House Hunters’ kind of way (it’s just interesting to know how much the Cubs are worth, and how much their value is changing), but also in terms of the pressures on ownership. I’ve made no secret that I very much like the Ricketts family (the kids, in particular) as the collective owner of the Chicago Cubs. They are fans who are dedicated to seeing a winner, and putting revenues right back into the organization. But if the Cubs suddenly doubled or tripled in value in just a few years? Might the Ricketts family – who made their bones in the securities industry, after all – see a bubble that they can’t resist exploiting? How can you turn down making a billion dollars in three or four years?

Well, even if the Cubs suddenly are worth $1.5 or $2 billion, I actually could see the Ricketts resisting the urge to cash in. Sure, it might be a bubble that will pop, and the value will crash back down to something closer to what they paid for the team, but professional sports franchise ownership is rarely about making money. The uber rich buy these teams because they are trophies. They are really expensive feathers to put in really expensive caps. It’s the dream that we all would have if we had that kind of money: if I could buy the Cubs, I would, and I would never, ever sell them for anything.

I hope the Ricketts family continues to feel that way, however valuable the Cubs become (and, if the Cubs have a good decade on the field, the value could explode even higher come 2020). We saw with the Tribune Company what can happen when the profits of the enterprise and the bottom line value of the franchise are the primary motivators in what gets put on the field.

  • Jon

    I would never, ever sell them either if I cold afford to purchase the team.

  • Dave

    If the Texas Rangers can pull in that kind of money from a cable company, the Ricketts are set for a very, very large payday within the next decade…especially if the Cubs can market sustainable success. The deal they will command from TV will dwarf what the Rangers pulled in.

    • Pat

      That’s only true if those TV deals turn out to be a good deal for the stations. The danger is that by time the Cubs can negotiate a new deal, it’s possible the networks are losing money on those type of deals and have stopped offering as much. Think of what happened with naming rights. There was a time the Cubs probably could have locked in 20 million a year for 20 years. No one is offering those type of deals anymore because it turns out they aren’t actually a great investment.

      • Brett

        I, too, have this concern. Particularly if the Cubs aren’t able to renegotiate the whole kit and kaboodle in 2014 when the WGN deal expires. If they have to wait until 2019 for the other half (it’s actually a hair more than half) … well, who knows what things look like then.

        • Sandberg

          What about a Cubs station similar to YES network? Have you heard any rumblings? I feel like this would be the obvious plan going forward.

          • Pat

            If the networks are offering the crazy dollars they currently are, then you take it.

            Creating their own network would be very expensive, and you need to figure out what you’re going to show most of the time. Actual game time is about 500 to 600 hours a year. Also then you need engineers, salespeople (to sell the ad time), broadcast facilities, etc. You would need something to get viewership the other 8,000 or so hours of the year.

            • Brett

              The upside can be enormous, if you can get enough cable providers to offer your channel (and have a sufficient national audience to support it). But, all good points.

  • ETS

    So many things to consider, but the 2 big ones I can think of are….
    1)Wrigley needs $300m in renovations – Dodgers didn’t have that or the special “landmark” status to work around
    2)TV contracts

    There’s probably a hundred other things to consider. There’s no way to be able to play this game without getting a look at the financials of the baseballs that we, as mere mortals, will never get the privilege of seeing.

  • bails17

    What are the chances of them selling off (or able to sell off) a percentage of the company. So 25-40% to create some cash flow for Wrigley? The remaining percentage may still be worth the amount that they paid in the first place or more. How often does something like that happen? I know that teams that have been in trouble have done so in the past. Brett…thoughts?

    • Cubbie Blues

      That is way too short sided. There is no such thing as a silent partner.

    • Brett

      There was a time when the Cubs sold teeny-tiny minority interests for like $25 million, if I remember correctly. It doesn’t really buy you anything more than a name plate (and a super-duper marked up asset), but it is a way to raise some cash. That said, not sure these owners really need or want to do that.

    • King Jeff

      The Mets recently pulled a similar move when Wilpon almost went belly up. It seems like it has worked out pretty well. I know the Ricketts want to keep it in the family, but if they found the right billionaire who cared enough about the Cubs, wouldn’t it be an interesting scenario to consider if the head-butting with the city continues?

    • bbmoney

      The other issue there is there is a huge control premium. If you could sell 100% of the team for 1.5B, no one is going to pay 150M for 10% of the team. The whole team is worth that much because you then get control, and everything else that goes with it. Owning 10% of the team just means you get to say you’re part owner (which is pretty awesome), but the kind of people with that kind of money want to call the shots. Same is true of any business acquisition.

      I think that’s reflected in the amounts the Wilpon’s got for the %’s they sold.

  • Coal

    Wonder whether you think this is “good news” in terms of the product on the field over the next several years (i.e., we’re making tons of money on paper, we can afford to splurge) or “bad news” (we’re putting crap on the field and still making money on paper woo hoo), or somewhere in the middle?

    • Brett

      You got me. That’s one of the essential questions, really. I tend to believe, though, that even if the Ricketts are all about making the Cubs more valuable (and I don’t think they are), they recognize that a team that is competitive for, like, 8 out of 10 years straight is going to be TONS more valuable.

  • Mick

    The value of the Cubs is an interesting topic because when the Ricketts bought the club, one could argue, was at a buy low point in the franchise. The TV contracts were 5 years (WGN) and ten years (FSN) away from renewal and the infrastructure badly were in need of huge capital investments. Since 2009, the Angels, Rangers, and Dodgers have all renewed their TV deals for massive $$ increases. This is partly to do with the emergence of digital video recording and advertising shifting its dollars into live sporting events as opposed to network sitcoms which can be recorded and commercials skipped. Add to the looming TV contracts, the investments by the Ricketts into the Spring Training facilities in Mesa, the baseball academy in the Dominican Republic and the renovations made to Wrigley to increase revenues, the Cubs are in a MUCH better point financially then they were just 3 years ago. I doubt the Ricketts would sell even at this point if they could net a $1 billion profit because there’s still the potential to net a much larger amount. If the Cubs were to say renew the WGN deal for 5 years setting both TV deals to expire in 2019, that would give the Cubs plenty of time to develop its own TV network, make the necessary renovations and upgrades to Wrigley and produce a winning team, all of which we don’t have currently.

  • Kevin

    If the Cubs are worth much more than they paid then NO public financing should even be considered. Are the Ricketts family willing to share their profits with CHICAGO? End of story!

    • Can’t think of a cool name

      I think they do, its called an amusement tax.

    • Drew7

      I really don’t feel like debating this topic, but how about the revenue local hotels, restaurants, and bars receive from Cub fans? I mean, its not *directly* sharing revenue, but its certainly a plus for the city.

      • Noah

        But how can you determine what hotels, restaurants and bars are receiving revenue, even indirectly, from the Cubs? Would it just be for when the Cubs are in town? What would be the geography? The vast, VAST majority of people visiting Chicago from April 1 to September 30 in any given year are not coming to see a Cubs game.

        • Drew7

          1) I didn’t realize that *which* hotels, restaurants, etc. was of any importance, since they’re all playing taxes based on revenue, right?

          2) obviously the vast majority aren’t in town to see the Cubs, but a decent amount of the 2.8 mil patrons are spending money at those establishments that they wouldn’t otherwise, I would think.

          • Cubbie Blues

            Yes, this has been proven out by Hansman and me on more than one occasion.

        • Jade

          The Cubs probably bring a quarter billion dollars worth of revenue to the area per year. Asking for 10 years of the amusement tax they have already paid the city to help keep that cash cow up to date and flourishing doesn’t seem to be insane. Especially since every other local sport franchise has had plenty of help.
          The problem isn’t the Cubs and Wrigley, its that Chicago is bankrupt and corrupt, but we all know this.

  • http://It'searly Mike F

    Great topic Brett as usual. This whole aspect goes largely ignored by the local media but is more central than most think. I know there is this sort of stereotyping of Tom Ricketts, but its important to consider at least that he might be much more business driven and his intellect far higher than most think.

    Clearly he bought when the assets of this organization, excluding talent, which because of how loyal we are and the overall size of the payroll is one of the lesser important components were significantly undervalued. But no one can reasonably argue he didn’t buy low and hasn’t already built very impressive equity by the recent sales and non doomsday scenario we live under today compared to then. Even the whole argument of landmark status has a flip side in that there is intrinsic value to whole aura of a near north side historic park that is so “quaint”. Political issues aside, there’s a formula to fix that whole thing at some point so put that aside.

    The big issue is TV Revenue and I think that is something that too doesn’t work against the Cubs being worth more too. Especially with the right person or group who are exceptionally media and sales savvy. Now what has Ricketts done? Well he has built on the Henry model in Boston, but he’s also invested a lot in scouting and minors. He’s put a “premiere” Baseball mind in the drivers seat, and he’s started to dismantle the roster to the point its becoming clear its a blank canvas. There’s less core that people think and what there is, is frankly dirt cheap. I have increasingly been getting the feeling over the last few months, that he may be creating a perfect blank canvas for someone who will pay and wants to step in to do exactly that. And yes, I believe he bought at a very good time and between the model he’s following and the market he and his family would stand, even today, to make a great deal of money. Anyway, great topic.